This week, the Senate is debating its version of the tax extenders bill that the House passed before the Memorial Day recess. The bill extends unemployment benefits through November (as well as some popular tax credits) and is partially offset by the closing of a few tax loopholes.

One of these loopholes has to do with carried interest, or the money that investors pay to money managers to manage hedge funds or private equity firms. Currently, such income is taxed at the lower capital gains rate, even though it is received in return for a service like any other salary or hourly wage. The Senate has, for a week now, been watering down the tax change (suggesting subjecting only 50 or 60 percent of carried interest to the higher tax rate), in an attempt to drum up conservative votes.

But Sen. Orrin Hatch (R-UT) today took to the Senate floor to proclaim that he would vote against the extenders package — and thus prevent millions of Americans from claiming unemployment benefits — because of the tax change, and dared the world to fight his analysis:

Why, then, am I planning to vote against this bill?…It is for the same reason that much of the business community is opposed to this legislation. The tax increases added to this bill will damage the economy and job creation and outweigh the benefits of extending the expired tax provisions [...]

For several years now we have heard it stated with outrage that hedge fund managers get by paying a lower tax rate on their billion dollar compensation packages than their secretaries pay on their relatively meager salaries…The simple fact is that if we increase the tax rates and change the nature of income for these partnerships, the economic hurdle rates will rise and fewer deals will get done. And if fewer deals get done, less economic activity will be generated and fewer jobs will be created. I don’t think anybody can fight that analysis.

Watch it:

Of course, plenty of people have already fought that analysis, pointing out that investors will not be affected by the change, only the wealthy managers they employ to oversee their investments.

But since Hatch is so concerned about venture capitalists shutting down their shops if the change comes to pass, I’ll turn it over to Fred Wilson, who is a venture capitalist, and wrote that “changing the taxation of the managers will not reduce the amount of capital going to productive areas”:

The sources of the capital; wealthy families, endowments, pension funds, and the like, will still put the capital in the places where they will get the highest after tax return. And these sources of capital, if they are tax payers, will still get capital gains treatment on their investments in hedge funds, buyouts, and venture capital. And the fund managers will still have to compete with each other to get access to that capital and their incentives will still be to produce the highest returns they can produce, regardless of whether they are paying capital gains or ordinary income on their fees.

As David Weidner pointed out (in the Wall Street Journal, of all places), “Wall Street’s private equity industry is going Tea Party on a new tax making its way across Capitol Hill. But don’t be fooled, this isn’t a populist movement, unless your brand of populism includes a dozen vacation homes.” Zaid Jilani also noted that opponents of the increase are making all sorts of outlandish claims about it, including that it will harm cancer patients. But taxing carried interest for what it is — income — is simply about fairness and fixing a bizarre inequity in the tax code that has no reason for existing.

Late last month, Mississippi state House Speaker Billy McCoy (D) and Lt. Gov. Phil Bryant (R) created a select committee to investigate the Gulf Coast oil spill. “[T]he people of Mississippi deserve to know how this happened and what the future may hold for this most valuable part of our state,” said McCoy. A key part of the select committees’ mission would be to hold hearings with top officials from companies responsible for the spill.

However, yesterday, BP wrote a letter saying it wouldn’t be showing up for the three-day hearings this week. ThinkProgress obtained the letter to McCoy, addressed from Margaret D. Laney, BP’s Mississippi Coordinator for Public and Government Affairs. From the letter:

I regret that we are unable to accommodate your invitation to participate Wednesday or Thursday in the hearing of the Mississippi House of Representatives Select Committee on the Gulf Coast Disaster.

We at BP take very seriously the desire of the Select Committee to gather information on the circumstances on the Mississippi coast relative to the oil spill. We are committed to meeting regularly with stakeholders along the Gulf Coast and to providing briefings for government officials on a regular basis, and we will continue to remain engaged in this way. When we meet with the Committee, it will be important for us to have appropriate BP representatives who are implementing the strategic response plan for Mississippi and working in the Mississippi Gulf Coast area. Unfortunately, the appropriate individuals are not available this week. We would be pleased to work with the Select Committee to identify a day in the near future for another meeting of the Committee — either in Jackson or on the Coast where the Committee also can visit incident response operations.

A BP spokesperson told the AP that the “many of the company’s executives” would be in Washington, DC. According to the Biloxi Sun Herald, both Transocean and Halliburton were also no shows.

McCoy was suspicious of the corporations’ refusal to testify, stating, “Considering the many officials BP has on standby in the Gulf Coast region, it is simply incomprehensible that the company could not send at least one to these hearings to give our citizens, lawmakers and business leaders their viewpoint on this oil spill disaster. We are not holding these hearings to conduct a witch hunt.” “Every one of BP’s public pronouncements has been as produced and careful as the Tiger Woods’ apology,” Rep. Brandon Jones (D) added. “What we want is for them to answer the hard questions and give us a sense of what is going on. By not showing up, it just leaves all that to our imagination and it breeds frustration.”

The last hearings BP, Halliburton, and Transocean officials attended didn’t go so well because they were all trying to pass blame for the spill and received widespread condemnation. The Washington Post noted that at last month’s Capitol Hill hearings, senior executives were “pointed fingers” at each other the whole time.

Late last month, Gov. Chris Christie (R-NJ) vetoed a bill passed by the state legislature that would have increased taxes on New Jersey’s millionaires, despite the state having a $10.7 billion deficit. Christie preferred to make up the difference in cuts to education and public health services.

Now, he’s proposing an amendment to the state constitution that would cap property taxes, which according to a new report by the Center on Budget and Policy Priorities, would force the state to further slash funding for education and other vital services:

[A] property tax cap in New Jersey is likely to end up reducing essential educational programs and services — as well as other public services, as it has in Massachusetts — and by itself would do nothing to create significant efficiencies.

Using constitutional amendments as blunt instruments to push an anti-tax agenda can seriously backfire; just look at California, where Prop. 13 has wreaked havoc, and given that state’s Republican minority the ability to block even common sense tax increases (like raising the tax on tobacco, which the California GOP has rejected 14 times).

New Jersey undeniably has a problem with property taxes, as it has the third highest in the country as a percentage of income. But that comes from the state’s near complete reliance on them to fund public services. In fact, “localities are nearly entirely dependent on property tax revenues.” But contrary to what Christie would have you believe, New Jersey is in the middle of the pack when it comes to overall taxation (with the 20th highest overall, as a percentage of income).

Massachusetts’ education system only recovered from that state’s experiment with a property tax cap following a huge infusion of public funding. And according to CBPP, Massachusetts is still paying the price for its blunt cap in terms of increased wait times for firefighters and police response, public libraries shutting down, and roads deteriorating.

“Whereas Massachusetts responded with massive infusions of state aid, Christie is cutting state aid,” said Steve Wollmer, spokesman for the New Jersey Education Association. “That’s a formula for destroying the public schools, hardly the act of a savior.” “If this is a tool, it’s a chainsaw,” added Massachusetts state Rep. Jay Kaufman, who has worked within the confines of his state’s law. “It just chops and cuts. I think you make much better policy with scalpels than you do with chainsaws.”

Christie is not alone in his line of thinking. Gov. Rick Perry (R-TX), for instance, has proposed that Texas adopt a Prop. 13 type amendment that would make tax increases next to impossible. But simply throwing a cap on taxes is not a responsible way to budget and it doesn’t take into account the real negative effect budget cuts have on those who count on public services. As CBPP pointed out, New Jersey could allow localities to use different taxes to fund services and streamline many of its education programs to find savings, thus enabling a property tax reduction.

This week, the Senate unveiled its version of the tax extenders package passed by the House before the Memorial Day recess, which extends unemployment benefits for jobless workers along with a handful of tax credits. It differs from the House version in that it restores Medicaid funding for states and softens the closure of a tax loophole that will prevent hedge fund managers from paying lower taxes than other workers.

During the House debate, the jobless benefits extension was scaled back and an extension of COBRA subsidies (to help laid off workers purchase health insurance) was cast aside, over unnecessary deficit hysteria (and despite 9.7 percent unemployment). And the Senate is well on its way to repeating the feat, with Sen. Jon Kyl (R-AZ) telling The Hill that “virtually all” Republicans oppose the legislation because it costs too much:

Senate Minority Whip Jon Kyl (R-Ariz.) said Republican resistance would likely remain until more of the legislation was paid for. “I think that virtually all Republicans oppose the bill in the form it was introduced here this morning,” he said Tuesday.

Of course, this is by no means a problem solely caused by Republicans. Sen. Ben Nelson (D-NE), for instance, said that “I’m not sure that I would vote for cloture. At some point you can no longer spend your way out without adding to the size of the growing problem of the increasing debt.”

As AFL-CIO President Richard Trumka told us yesterday, “we do not have a short-term deficit crisis, we have a short-term jobs crisis in this country. And anyone that doesn’t believe that has either, I think, been reading too much fiction or they have their head in the sand.” Indeed, in the short-term, it’s highly appropriate to spend to create jobs and to ensure that those who are out of work don’t engage in too much pro-cyclical fiscal tightening.

After all, consumers make up 70 percent of the economy, and when they cut back, demand plummets and more jobs are lost. At the moment, 1.2 million Americans who had expected jobless benefits have had those benefits pulled out from under them due to the Senate’s inaction.

According to a recent NBC News/Wall Street Journal Poll, Americans do not prioritize deficit reduction over job creation. In fact, only 5 percent of respondents to the poll cited it as their top concern, while 35 percent said job creation is the most important policy priority of theirs. So it isn’t like this is a matter in which pushing for more robust job creation puts lawmakers on the wrong side of public opinion.

Instead, lawmakers are giving in to fearmongering about the short-term deficit, to the detriment of both those unemployed and the wider economy. As Rep. Jim McDermott (D-WA) said, “if we can afford wars, tax cuts and bank bailouts, then we can certainly afford to maintain programs for workers who have lost their jobs through no fault of their own…We must not abandon these workers and their families.”